Question:

Alli Co. is a merchandising business. The account balances for Alli Co. as of November 30, 2012 (unless otherwise shows), are as follows:

110         Cash      $ 73,920

112         Accounts Receivable      37,875

113         Allowance for Doubtful Accounts             3,500

115         Merchandise Inventory                133,900

116         Prepaid Insurance           3,750

117         Store Supplies   2,850

123         Store Equipment              100,800

124         Accumulated Depreciation-Store Equipment      20,160

210         Accounts Payable            21,450

211         Salaries Payable                0

218         Interest Payable               0

220         Note Payable (Due 2017)              10,000

310         P. Williams, Capital (January 1, 2012)       89,510

311         P. Williams, Drawing       40,000

312         Income Summary            0

410         Sales      853,040

411         Sales Returns and Allowances    20,600

412         Sales Discounts 13,200

510         Cost of Merchandise Sold            414,575

520         Sales Salaries Expense   74,400

521         Advertising Expense       18,000

522         Depreciation Expense    0

523 Store Supplies Expense         0

529         Miscellaneous Selling Expense   2,800

530         Office Salaries Expense 40,500

531         Rent Expense    18,600

532         Insurance Expense          0

533         Bad Debt Expense           0

539         Miscellaneous Administrative Expense  1,650

550 Interest Expense     240

Alli Co. uses the perpetual inventory system and the last-in, first-out costing technique.

Transportation-in and purchase discounts could be added to the Inventory Control Sheet, but since this can complicate the computation of the Last-in, first-out costing technique, please ignore this step in the process. They also use the Allowance technique for bad debt.

The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the

Inventory Control Sheet could be updated as each transaction affects them (daily).

Alli Co. sells four kinds of television entertainment units.

The sale prices of each are:

TVA: $3,500

TV B: $5,250

TV C: $6,125

PS D: $9,000

During December, the last month of the accounting year, the subsequent transactions were completed:

Dec.

1. Issued check number 2632 for the December rent, $2,200.

2.Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800.

3. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400.

4. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.

5. Sold two project systems for cash.

6. Purchased store supplies on account from Matt Co., terms n/30, $620.

7. Issued check to Prince Co. number 2634 for full amount due (November's balance plus December 3rd transaction), less discount allowed.

8. Issued credit memo for one TV A unit returned on sale of December 6.

9. Issued check number 2635 for advertising expense for last half of December, $1,500.

10. Received cash from Albert Co. for filled amount due (less return of December 14 and discount).

11. Issued check number 2636 to purchase two TV C units, $7,600.

12. Issued check number 2637 for $6,100 to Joseph Co. on account.

13. Sold three TV C units on account to Cameron Co., invoice number 892, terms 1/10, n/30, FOB shipping point.

14. For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $600.

15. Received $12,250 cash from McKenzie Co. on account, no discount.

16. Purchased three projector systems on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,600.

17. Get notification that Marie Co. has been granted bankruptcy with no amount of recovery. We are to write-off her amount due.

18. Issued a debit memo for return of $5,200 due to a damaged projection system purchased on December 21, receiving credit from the seller.

19. Issued check number 2639 for refund of cash on sales made for cash, $1,000. (Customer was going to return goods until an allowance was arranged.)

20. Issued check number 2640 for sales salaries of $1,750 and office salaries of $950.

21. Purchased store equipment on account from Matt Co., terms n/30, FOB destination, $800.

22. Issued check number 2641 for store supplies, $550.

23. Sold four TV C units on account to Randall Co., invoice number 893, terms 2/10, n/30, FOB shipping point.

24. Received cash from sale of December 20, less discount, plus transportation paid on December 20. 25. Issued check number 2642 for purchase of December 21, less return of December 24 and discount.

26. Issued a debit memo for $200 of the purchase returned from December 28.

Instructions:

1. Enter the balances of each of the accounts in the suitable balance column of a four-column account (General Ledger). Write Balance in the item section, and place a check mark (√) in the Post Reference column.

2.Journalize the transactions in a sales journal, cash receipts journal, purchases journal, cash payments journal, or general journal as explain.

3. Total each column on the special journals and prove the journal.

4. Post the totals of the account named columns and individually post the "other" columns as well to the General Ledger.

5. Organize the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).

6. Organize the unadjusted trial balance on the worksheet.

7.Prepare the worksheet for the year ended December 31, 2012, using the subsequent adjustment data:

a. Merchandise inventory on December 31 $110,200

b. Insurance expired during the year 1,250

c. Store supplies on hand on December 31 975

d. Depreciation for the current year needs to be evaluated. Alli Co. uses the Straight-line method; the store equipment has a useful life of 10 years with no salvage value.

e. Accrued salaries on December 31:

Sales salaries $480

Office salaries 260 530

f. The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest have to be recognized for one month (round answer to the nearest dollar amount).

g. Total realizable value of Accounts Receivable is determined to be $30,000.

8. Purpose a multiple-step income statement, a statement of owner's equity, and a classified balance sheet in good form.

9. Journalize and post the adjusting entries.

10. Journalize and post the closing entries. Show closed accounts by inserting a line in both balance columns opposite the closing entry.

11. Purpose a post-closing trial balance.